The Big Beautiful Bill Act: What Employers Need to Know for 2025

There’s been a lot of buzz around the One Big Beautiful Bill Act (OBBBA) and how it could reshape payroll and benefits. The IRS has now offered some clarity for 2025, and new provisions are worth noting.

What’s Staying the Same for 2025

The IRS confirmed that for Tax Year 2025, employers and payroll providers can keep their processes in place:

• Form W-2, 1099, and 941 will remain unchanged

• Federal income tax withholding tables will remain unchanged

• Reporting and withholding procedures remain the same

That means no scrambling; your payroll runs and reporting stay consistent this year.

New Benefits & Relief for Employers and Employees

The OBBBA also introduced important provisions that affect group health plans and benefits programs:

• Permanent Telehealth Relief – HSA-eligible HDHPs can now permanently cover telehealth and other remote care services at first-dollar coverage without jeopardizing HSA eligibility.

• Direct Primary Care (DPC) – DPC arrangements can now be reimbursed by an HSA, provided they exclude certain high-cost services (like surgery requiring anesthesia or prescription drug coverage).

• Dependent Care Assistance Program (DCAP) Expansion – Employers may now increase DCFSA limits from $5,000 to $7,500 (though it’s optional, not mandatory).

• Student Loan Repayment – Employers can now permanently reimburse up to $5,250 of an employee’s student loan debt tax-free, with indexing beginning in 2026.

What Didn’t Make It In

The original draft of the OBBBA included codifying Individual Coverage HRAs (ICHRAs) into law, but that provision was left out of the final bill.

Other Indirect Considerations

Shifts in Medicaid and ACA marketplace rules may cause more employees to migrate onto employer plans, depending on regional impacts of Medicaid spending changes.

What’s Next

For 2025, employers can take comfort knowing payroll processes aren’t changing—but these new benefit opportunities are worth reviewing. At Thread, we’ll keep you stitched into the latest updates and help you evaluate how these changes may affect your people strategy.

Stay tuned; we’re working on hosting a webinar with a trusted employment attorney to unpack these updates even further.

The blog does not constitute legal advice and does not address state or local law.